Project Integration Management Tutorial

Welcome to the third lesson ‘Project Integration Management’ of the CAPM Tutorial, which is a part of the CAPM Certification Course offered by Simplilearn. In this lesson, we will focus on project integration management.

Let us begin with the objectives of this lesson.

Objectives

After completing this lesson on Project Integration Management, you will be able to:

Define Project Integration Management

Identify the key role of the project manager, project team, and project sponsor

Explain various project selection methods

Describe the Project Integration Management processes

Identify key terminologies used in Project Integration Management

In the next section, let us take a quick look at the project management process map.

Project Management Process Map

There are 47 processes in project management grouped into ten Knowledge Areas and mapped to five Process Groups. In this lesson, we will look at the first knowledge area, i.e., Project Integration Management and its processes.

In the next section, let us understand the concept of Project Integration Management.

Project Integration Management

The project integration management is high-level work that project manager does and it involves managing interdependencies among the other knowledge areas.

The other nine knowledge areas involve detailed work in a specific direction. For example, Project Cost Management deals only with how to manage the cost of a project.

The project management processes do not happen independently. For example, a new resource added to the project may require changes in cost or schedule or both.

In dealing with such situations, the project manager integrates the processes of project management. The need for integration drives much of the communication and the work of the project manager.

Let us next discuss the key role of project manager, sponsor, and team in the next section.

Role of Project Manager, Team, and Sponsor

Project manager, team members, and project sponsors have different roles to play in a project.

Project Manager

The project manager is supposed to play multiple roles in the project; the key role is to perform the integration. The project manager puts all the pieces of the project together into a cohesive whole.

In doing so, the project manager tries to ensure that the project is done faster, cheaper, and utilizes resources optimally, while meeting the project objectives.

Project Team

As the project progresses, the team members work on completing the project activities.

Project Sponsor

The role of the project sponsor is to protect the project from any unnecessary changes and to ensure that it has the required resources for completion.

The project sponsor is the champion for the project within the performing organization, i.e., the organization in which the work is being performed.

In the next section, we will cover the project selection methods.

Project Selection Methods

An organization can undertake a project under contract with an external organization or take up a project driven by internal business needs.

There should be a formal process of selecting the project in all organizations, to ensure that it is making the best possible use of limited corporate resources.

For example, if the organization has an option to take up any one out of the two projects, both of which use the same corporate resources, the organization would naturally select the one, which is more profitable.

There are two broad ways to select a project. There are different methods under both these categories and you should be familiar with the names of these methods.

Benefit measurement methods

One way is the benefit measurement method where one project is compared with other competing projects.

Broadly, the benefit measurement methods focus on ascertaining the costs and benefits of undertaking the project.

The methods under benefit measurement method include:

murder board where a panel of experts shoots down a new project idea

peer review

scoring models

economic models

benefit compared to cost

Constrained optimization methods

Another approach is based on mathematical models wherein you examine the most optimal selection of projects by trying to optimize a goal – for example, maximize operating profits. Such methods may be called constrained optimization methods.

The constrained optimization methods rely on mathematical modeling techniques to determine the best selection of projects to achieve certain business objectives.

The methods of constrained optimization method include linear programming.

In reality, you might not have seen these methods to be followed in project selection. Often, personal relationship with the sponsor may be more important than anything else.

This is quite normal and any organization worldwide works this way. However, as a certified project manager, it is important for you to be familiar with more scientific methods of project selection.

A typical question on the CAPM exam could be: “What type of project selection technique is peer review?” and the right answer is “benefit measurement method”.

You need to understand the characteristics of various project selection methods to answer scenario based questions.

In the next section, we will continue to focus on the project selection methods.

Project Selection Methods (contd.)

An organization has limited resources. They cannot execute all the projects that come their way. They can take only those projects for execution, which are financially sound for the organization. There are various parameters used in making such decisions.

Some of these terms are:

present value

net present value

an internal rate of return

payback period

benefit cost ratio

return on investment

opportunity cost

Let us learn about the parameters in detail.

Present Value

Present value is today’s value of future cash flows. In order to reduce future cash flows to present values, a “discount factor” has to be applied.

What this essentially means is, if a project can give a return of say $100 per year, $200 next year, and $250 the third year, what is the value of all these returns today?

$250 return in the 3rd year will not be the same as $250 today due to inflation or any other constraint.

Net Present Value

Net present value (NPV) is the present value of the total benefits (income or revenue) less the costs over time. Therefore, if multiple items are involved, add the present value of all of them to arrive at the net present value.

Problems where a project has to be selected over other projects, on the basis of their net present value, can be expected in the exam. Let us take an example of a typical question that we might encounter in the exam.

You have two projects to choose from. Project X will take 2 years to complete and has an NPV of $35,000. Project Y will take 5 years to complete and has an NPV of $95,000.

Which one will you choose?

The answer is project Y, because it has a higher NPV.

Do not get confused with longer duration of the project; it is important that NPV be more.

Internal Rate of Return

Another term used in evaluating a project is internal rate of return or IRR. IRR is the rate of discounting at which the present value of costs matches the present value of benefits. It is the rate inherent in the project.

Let us look at an analogy to understand the concept of IRR. Consider a project similar to depositing money in a bank account and earning interest. You will prefer the bank that gives maximum interest. Similar is the project.

Choose from project A and B wherein Project A has an IRR of 25% or project B has an IRR of 15%. The answer is project A, as the IRR is better for project A. It is obvious, higher the IRR, the better.

Payback Period

Payback period is the number of time periods it takes to recover your investment in the project before you start making a profit on the investment made in the project.

You have two projects to choose from:

project A with a payback period of 5 months

project B with a payback period of 12 months

Which one would you go for?

The answer would be project A. It is evident that lesser the payback period, the better.

Benefit-Cost Ratio

Benefit-cost ratio is the ratio of the present value of benefits to the present value of costs. A benefit-cost ratio of more than 1 means that benefits are greater than the costs. If the benefit-cost ratio of project A is 2.5 and benefit-cost ratio of project B is 1.5, which project would you select?

The answer is project A – as the benefit-cost ratio is higher in project A.

Return on Investment

Return on Investment or RoI is commonly used in financial parlance to indicate how profitable a project is. Return on investment is the average rate of return (or benefits) expected as compared to the initial investment.

If a project involves an initial investment of $100,000 and generates an average return of $20,000 per year, it means the RoI is 20,000/100,000 (pronounce as “twenty thousand-by-one hundred thousand”) or 20%. Higher the RoI, the more profitable the project is.

Opportunity Cost

Opportunity cost is yet another term used in evaluating competing projects that you might see in the exam. It means the opportunity given up by selecting one project over another. Problems where a project has to be selected over other projects, on the basis of their net present value and opportunity cost, can be expected in the exam.

For example, you may come across a question such as: What is the opportunity cost of selecting project B if Project A has an NPV of $55,000 and project B has an NPV of $85,000? The answer is $55,000. This is the NPV of project A, which was selected over project B.

Project Integration Management Processes

There are six project management processes, which are part of the project integration management knowledge area. They are:

The Develop Project Charter done in the Initiation Process Group

Develop project management plan undertaken in the Planning Process Group

Direct and manage work carried out in the Executing Process Group

Monitor and control project and Perform integrated change control undertaken in the Monitoring And Controlling Process Group

Close project or phase done in the Closing Process Group.

Let us look at each of these processes in detail. In the next section, let us understand how to read process-related information.

Reading a Process Diagram

As you can see in the project management process diagram, these elements within the knowledge area represent the inputs from the same knowledge area. These elements represent the inputs from other knowledge areas.

These represent the tools and techniques used in the process. These are outputs of the process; these represent the output within the same knowledge area whereas these outputs are fed into the knowledge areas other than the one that the process is a part of.

You can observe that the process in the image is color-coded based on the process group. Initiating process group is in yellow, planning process group is in blue and so on. You can read the processes and their color codes in the legend box on the bottom left of the section.

The process group affiliation is also indicated in the text of the description. It is important to understand the process group context to appreciate what the process does.

In the next section, let us look at the develop project charter process.

Develop Project Charter

Develop Project Charter is an initiating process. A project charter is essentially a document that “authorizes” a project. Once a project has received a charter, it means that the project manager can start employing the organization’s resources for the project activities.

Let us look at the key inputs to be considered in preparing the project charter.

The first input is the “project statement of work.”

This is created by the project sponsor or the customer describing their needs, project scope, and how the project fits into their strategic goal. If the project is taken up under a contract, the request for proposal (i.e., RFP) can be considered as “project statement of work.”

The next input is the business case.

This document establishes whether the investment in a project is worth, from a business point of view, the business need for the project, and the cost-benefit analysis. It provides important information to the project manager about the goals of the project and the boundaries in terms of the desired results, cost, etc.

If the project is being undertaken as part of a contract or agreement, the agreement provides an important input for the project manager that establishes what must be done in the project.

The next input to be considered for project charter is “enterprise environmental factors”.

Any project to be executed within the organization has to deal with the organizational culture and existing systems. You can consider this as an “organization baggage” that comes with the project.

This is the reason a project being executed in two different organizations may be done differently.

Another factor to be considered is organizational process assets.

This is a broad term and includes all the organizational processes, procedures and policies, corporate knowledge base, and historical project information. Every organization develops a set of processes, procedures, and policies that are based on the best practices learned by the organization over time.

Expert judgment is an invaluable input to the process of formally authorizing a project because an expert can provide insights into why a project makes business sense or why it does not. From experience, they may be able to shed light on the validity of the business drivers, feasibility, assumptions, and constraints that need to be considered for the project.

Facilitation techniques is another technique used.

The chartering process is often a collaborative activity involving many influential stakeholders in an organization. Facilitation techniques help bring all these stakeholders together and engage in fruitful discussions in order to arrive at an informed decision whether to go ahead with a project or not. The only output of this process is the project charter.

Let us try to understand what the project charter might contain.

The project charter usually contains the high-level project requirement and it should be created by the project sponsor and handed over to the project manager.

The project manager can do the groundwork to prepare the project charter, but it must be signed by the project sponsor or somebody in the “performing organization” who is higher in authority than the project manager.

It is important to point out that a project charter is not a project management plan. The detailed risk, schedule, cost analysis, etc. is part of the project management plan and it should be done during the project planning phase when there is more detail on the availability of the project to do so.

The charter should be sufficiently “high level” to accommodate the minor changes that may arise in the project.

In the next section, let us discuss the second process under project integration management which is Develop Project Management Plan.

The project management plan does not just describe when the project would start, what activities should be done, and when the project would get over. It is a detailed document and describes how the project would be executed, monitored and controlled, and closed.

Many people think that project schedule developed using Microsoft Project is the project management plan. However, that is not true. Project management plan contains all the subsidiary plans and their baseline value. It also contains the allowed variance in the baseline value.

Performance measurement baseline of project’s time is the total of project baseline time and the agreed time variance for the project. For example, the time management plan section would have mentioned the time taken by a project.

The period mentioned in the project management plan is 180 days. This 180-day period is also called the baseline time value. Therefore, the baseline value is the initial agreed value in the project management plan.

So, if the time variance agreed in the plan is 10%, the project should be executed in maximum 180+180*10% = 180+18 = 198 days. Whether the baseline time value should be 180 days or 300 days is decided by analyzing the project activities and it should not be decided arbitrarily.

In the next section, let us look at the various inputs, outputs, and tools and techniques of this process.

Develop Project Management Plan (contd.)

Let us look at the inputs considered in developing the project plan. Project charter from the previous process is an important input. The other inputs include the output of the other planning processes because the project management plan is supposed to integrate all of these plans.

The examples of other plans are time management plan, cost management plan, and quality management plan, etc. All of these plans are developed over a period as the project progresses. These will be discussed in detail later in this tutorial.

In addition to these, enterprise environmental factors and organizational process assets are also inputs to developing the project management plan. In fact, these two factors have more influence in developing project management plan than in developing project charter.

It is recommended that you understand these inputs, outputs, and tools and techniques clearly, as most of these will be repeated in other processes as well. The two tools and techniques employed in this process are expert judgment and facilitation techniques. The very obvious output of this process is the Project management plan.

In the next section, let us look at some of the key terms, which are crucial to understanding these processes.

Key Terms related to Project Management Processes

Let us look at a few key terms to understand project management processes.

Work Authorization System

The first is the work authorization system. There should be a formal process of authorizing work within the project. So be it internal team members or a project contractor, there should be a formal process of giving the go-ahead to start work on the project.

Corrective And Preventive Action

The next two related terms are corrective and preventive action. You will come across these terms throughout this CAPM tutorial. Corrective action is any action taken to bring expected future project performance in line with the project management plan.

For example, if a project milestone is delayed, as a corrective action, you include additional resources to ensure that the final project deadline is not delayed. While corrective action involves implementing actions to deal with actual deviations from the performance baselines, preventive action deals with anticipated or possible deviation from performance baselines.

For example, to ensure that projects are not delayed, you do a proper estimation of the work and assign enough resources to the project so that they are not delayed.

Change Control System

A very important system that needs to be established early on a project is the change control system.

Since projects are executed in a dynamic environment, it is quite natural to expect changes in the project requirements. The change control system is the formal documented procedures, paperwork, tracking systems for authorizing changes.

Therefore, the change control system analyzes each of the incoming change requests and decides whether to accept the change request or reject it. A configurable item is any product, service, or result within the project, whose characteristics need to be identified, documented, and placed under change control mechanism.

When a formal configuration management system is put in place, it is essentially establishing a control system that can preserve the characteristics of these items.

Now, let us look at the next process of the project integration management knowledge area, which is direct and manage project work.

Direct and Manage Project Work

Direct and manage project work is the process of performing the work defined in the project management plan to achieve the project objective. This process marks the performance and completion of activities in a project.

The input to this process is obviously the project management plan since the project is executed as per the project management plan.

The other inputs to this process are any approved change requests that need to be implemented. These could be in the form of corrective or preventive actions upon which the team has decided to work. The other two inputs are enterprise environmental factors and organizational process assets.

Let us now look at the tools and techniques.

Expert judgment is an important tool used in this process as well. Another technique is the project management information system or PMIS. The PMIS is a combination of documents, dashboards, software tools, etc. where the data and information related to the project get collected as the work is being done.

During execution, it is natural to expect that plenty of meetings will take place among the team members and among other stakeholders as well. There are several outputs from this process. Project deliverables are produced.

As the deliverables are being produced, there would also be data related to the project performance that will be generated, such as what was done, how long did it take, how much did it actually cost, etc. Along with these key outputs, there are chances that new change requests may emerge.

This could be because, during the execution phase, the team or the stakeholders may realize that what is being produced is not meeting the expectations or needs and that something else may need to be done. In the process, project documents and project management plan get updated.

Let us look at monitor and control project work in the next section.

Monitor and Control Project Work

Monitor and control project work is the process of tracking, reviewing, and regulating the progress to meet the performance objective or objectives defined in the project management plan. Now, the estimated time performance measurement baseline is 180 days and 10%.

The monitor and control project work is the process area that tracks whether 180 days and 10% time performance baseline is being met or not. Let us also look at the key inputs for the monitor and control project work process.

Project management plan is the key input, as the performance measurement baselines are part of project management plan. The other key input to monitor and control project work is work performance information.

It is the status of the project, i.e., the status of the project deliverables, the cost incurred, the time elapsed in the project, etc. Along with the work performance information, forecasts related to the cost and time form important inputs upon which the project manager has to act.

Validated changes confirm that the approved changes have been appropriately incorporated. Enterprise environmental factors and organizational process assets are also inputs to this process.

Expert judgment, Analytical techniques, Project management information system, and meetings are the various tools and techniques.

One of the outputs of this process area is change requests. Change requests could be in the nature of corrective and preventive actions or defect repair.

If the performance measurement baselines are not being met, this process ensures that project manager takes appropriate corrective and preventive action to get close to the performance measurement baselines.

Along with the recommended corrective and preventive action, monitor and control project work also results in identifying defects, which must be taken care of.

During the defect repair process, many reports related to the performance of the work of the project will be produced. Project management plan and project documents are also updated.

In the next section, let us focus on perform integrated change control process.

Perform Integrated Change Control

Perform integrated change control is the process of reviewing all change requests, approving and managing changes to the project deliverables, organizational process assets, project documents, and the project management plan.

This is where all the recommendations for changes, corrective actions, preventive actions, and defect repairs are evaluated across all the knowledge areas and either approved or rejected.

The inputs to this process are similar to that of the monitor and control project work process, listed as:

project management plan

work performance reports

enterprise environmental factors

organizational process assets

change request

The only additional input is the change request, since the perform integrated change control process is supposed to take care of managing the incoming changes.

To make a judgment about the change requests, project management plan and the work performance reports are also referred to.

Another important tool and technique used in this, along with expert judgment and meetings, change control tools, and most important among them is change control board.

The team takes up the ownership of analyzing each of the incoming changes and also does the impact analysis for the changes, and finally approves or rejects a change.

The project manager, project sponsor, and few of the important stakeholders and team members may be part of the change control board.

The process should produce change requests that are approved, a log of change requests processed (requests that were either approved or rejected), and a few updates to the project plan and other documents.

Change management and change control is the theme recurring in many questions in the examination. You can expect questions in the exam, which test a project manager's response to a particular change in the project.

In the next section, let us take a closer look at the functioning of this process.

Change Management Process

Now, let us look at the process of change. First, the project manager should determine that a change has either already occurred or if the change is necessary. One of the important qualities of a good project manager is that they will push back on “unnecessary” changes.

The next step is to evaluate its impact on the project in totality. The team needs to understand what would be the impact on the time, cost, quality, risk, resource requirements, and so on.

Once the impact is known, the project manager along with the team should look for various possible options to accommodate the change.

For instance, in order to accommodate an increase in scope, it may be necessary to extend the timeline, add resources, increase budget or a combination of the above.

Once the impact analysis and exploration of possible options are completed, the project manager should present it to internal as well as external stakeholders for their approval.

It should be presented to internal stakeholders first, because the management of an organization may decide to absorb the change within the project’s reserves without opting to bill the customer.

If the project will have an impact on the agreed baselines of time, cost, scope, and quality, one needs to get in touch with the external stakeholders and the customer.

These steps are an important aspect of a project manager’s job, and the ability of a project manager to manage change will be tested in the CAPM examination.

In the next section, let us look into a business scenario to understand this concept better.

Business Scenario—Problem Statement

You are the project manager of a new corporate initiative that is focused on revising and re-classifying the staffing positions in its Design Division.

The project plan has been developed and everything is progressing smoothly now that you have to overcome the unwillingness of the staff to provide insight into their roles and responsibilities.

The past five project team review meetings have shown that you are on schedule and 5% under budget.

Now, you are preparing the project status report for your upcoming meeting with the Project Sponsor. Being halfway through the project, you are positive and excited at your project stats despite the rocky start.

Unfortunately, the meeting with the Project Sponsor did not go as planned. You are informed by the Sponsor that the deadline for the project needs to be moved up by 30 days and the budget will remain the same.

The Sponsor has asked you to submit a plan of action on how you would accomplish this new deadline.

What should you do?

Business Scenario—Solution

You need to schedule a team meeting to discuss your strategy and plan for implementing the change. After reviewing your change management plan, your team should first look at the remaining work to be completed to assess what it would take to complete the activities.

This relates to the triple constraint and other measurable constraints: quality metrics, risk re-assessment, and resources. Then, the team will be able to brainstorm and analyze how to adjust the calendar accordingly and still meet the budgetary constraint.

After approaching the problem using the triple constraint and change management process, you will be able to create a new viable plan of action so that you will both meet the new deadline and not compromise the integrity of the deliverable.

Using the triple constraint and change control process is a great framework for assessing change and making decisions around change.

In the next section, we will address the last process under project integration management, i.e., close project or phase.

Close Project or Phase

Close project or phase is the last process of the project management integration knowledge area. This process ensures that the project or a phase is formally closed after completion.

Remember that PMI expects a mature organization and a trained project manager to be diligent in following closure formalities. Without going through the formal closure formalities, the project cannot abruptly be closed.

The project should be formally closed, even if it is terminated due to some problem.

The key input to this process is the accepted deliverables. The deliverables have to be brought into a state that they can be properly transitioned. Transition means they are handed over to the organization or group that will be responsible for operations, maintenance, and support.

The other inputs are project management plan and organizational process assets. Expert judgment, analytical techniques, and meetings are the commonly used tools and techniques. The closure of a project or a phase results in a product, service or a transition.

In the process, one of the important outputs is updates to the organizational process assets. These include the actual performance against the plan, the key lessons learned during the project, the risks identified, the updates to the skills and experience of the team members, etc. Updating these assets is mandatory as it helps the organization gain maturity and learn from the experience.

In the next section, let us look into a business scenario to understand this concept better. After reading the problem statement, click the solution button to look at a possible answer.

Business Scenario—Problem Statement

The ABC Fencing Line of Business has been progressing for the past two years and it is now ending. The new LOB is finally ready for its ‘Go live’ date and become a new service option for the company.

In the last week of work on the project schedule, only 10 of the 50 project team members involved in the life of the project are needed to complete the remaining tasks that will take it live.

You have already been assigned your next project, which starts in 4 weeks. Because of the tight transition time, you are pressed for time to formally close the project on time, hand it over to the customer, and prepare to start your new assignment.

What is the best course of action?

Business Scenario—Solution

To proactively prepare for the post-project review meeting, you need to inform the remaining team members that each of them will be responsible for contributing to the Lessons Learned process and that you want them to start capturing these notes prior to your upcoming meeting.

Some team members could be apprehensive about contributing because they do not see the value or benefit in this process and feel you could have done it on your own. In that case, you need to explain that lessons learned and historical information are valuable because they give insight and a potential starting point for new projects.

You should inform the team that this is also part of the updates to Organization Process Assets, which is necessary to close the project formally.

Let us now check your understanding of the topics covered in this lesson.

Integrating the project activities is the key role of a project manager; the project team focuses on completing the project activities and the project sponsor warrants the team against unsolicited changes.

Benefit measurement methods ascertain the costs and benefits of undertaking the project while constrained optimization methods rely on mathematical modeling to select the best projects that achieve business objectives.